Debates about reforming public services tend to be couched in jargon such as "contestability" and "co-design" rather than the simple language of better health, education and care. But at heart, there are two basic prescriptions politicians turn to: investing more money and telling frontline services what to do with it; and giving power away. Which is in favour has less to do with ideology and more with circumstance. Only 10 years ago, there was a political consensus that extra investment in health and education was what was required. Now, with budgets being slashed, it's perhaps no surprise that giving power away is back in vogue.

For the right, it's about breaking down centralised control via market forces, with private and voluntary sectors competing to provide services. The left's favoured version is democratic devolution to the community level, enabling more people to get involved in shaping and running their local services. Everyone's seemingly a winner: politicians get to set out an agenda without saying exactly what they would do. Social innovators, freed from government bureaucracy, get to transform their communities. Members of the public get better-quality schools, hospitals and care homes.

All well and good in theory. But last week, ministers were busy dealing with the consequences of what happens when power has been handed over with little accountability for when things go wrong. Education secretary Michael Gove's flagship free schools programme, designed to help private companies and social entrepreneurs set up schools free from government interference, has been dogged with problems. As we report today, the department's response has been to create a souped-up failure regime for these schools, which were originally conceived as a way for parents and teachers to escape centralised command and control.

In Tower Hamlets, the directly elected mayor, Lutfur Rahman, has been accused of fraud and mismanagement, including selling council assets cheap to favoured individuals, forcing the local government secretary, Eric Pickles, to investigate.

Proponents of radically breaking up centralised power would say these are worst-case examples: inevitable risks of an approach that will provide better services for most people. Yet the risks are greater than they would admit. To produce its purported benefits, the right's version of decentralisation depends on an army of local government officials highly skilled in writing complex, performance-based contracts with companies and charities, and savvy consumers of public services, happy to shop around and switch hospitals and schools in the same way they would supermarkets. But officials who really understand how to contract with the private sector are the exception, not the norm, and it's far more difficult to switch your child's school than energy provider.

The left's favoured version depends on local democracy robust enough to prevent special interest groups capturing services for their own ends. Yet the English appetite for local democracy is renowned for its lack of lustre. Just last week, allegations escalated about the infiltration of a Birmingham chain of academies by extremist Islamic elements, highlighting the risks of hyper-localised power in divided communities.

Whether it's bloated NHS managers, local government penpushers or liberal headteachers putting 1970s education ideology above pupil welfare, politicians like to have a clear scapegoat for bad quality services. In their eagerness to hand over power to a new crop of innovators they believe will inevitably provide better services, they rarely stop to think about what happens when things go wrong.

But the idea that there is a cadre of brilliant frontline professionals, prevented from doing their jobs by government diktats and paperwork, is a convenient myth. Take education: according to the OECD, English schools have greater budgetary freedoms than almost anywhere. There are hundreds of schools led by visionary headteachers, providing an outstanding education in the most challenging of circumstances. Just as successful entrepreneurs don't spend their days bemoaning red tape – they leave that to the failed businesses – these school leaders rarely talk of an overcentralised state being at the top of their list of gripes. Bureaucracy is too often touted as an excuse for failure.

Ministers need to be more aware of the dangers of creating new opportunities for organisations to take over services without proper accountability. Alongside radical do-gooders, they are likely to attract people who see something in it for themselves. Political leaders need to be more hard-headed about when decentralisation is and is not appropriate. Our national entitlement to free healthcare may not have existed today if, after the war, health had been left to local councils to provide along with social care. No one would nominate social care, characterised by huge and arbitrary postcode lotteries, as a shining beacon of localisation. Imagining the NHS in this mould may seem a stretch, yet there is an emerging consensus that health and social care budgets should be integrated at the local level. The danger is that the NHS may start to look more like social care than vice versa.

Doing things centrally can also bring economies of scale. It might seem absurd to imagine Whitehall asking local councils to set up 152 separate student-loans companies. Yet as part of its care reforms, the government has told them they will need to run their own equity-release schemes to help people pay for care, despite the fact they don't have the actuarial know-how to do so.

Most people are pragmatic about who runs their services, so long as they are good and responsive. But too often, there isn't a culture of publicly funded services listening to their users, using their feedback to drive improvements in what they do on a day-to-day basis, something that businesses must do to survive.

If they really want to transform poor and average services, our governing classes should avoid the distraction of cooking up new ways of giving power away and focus instead on getting the next generation of public service leaders signed up to this agenda. The oversimplistic and highfalutin political debate on decentralisation – pitting Fabian top-downism against letting 1,000 flowers bloom – feels a million miles from the reality of too many people getting services that aren't quite good enough.